Seaspan puts positive spin on box ship oversupply

THE fact that almost half of the world's current container ship order may never be turned into actual deliveries amid the global credit crunch is one of the several silver linings that would counter widespread fears of an industry meltdown and collapse of major shipping lines, according to Seaspan CEO Gerry Wang.

The newbuilding over-supply situation is not as bad as it is being shown in the headlines, Mr Wang was quoted as saying. I do not see any crash of major operators. Globalisation will continue, and business will pick up.

Other factors that are expected to ease the oversupply situation are the possible conversions of existing container ship orders into other vessel types. Furthermore, additional ships are likely to be needed to service the same routes as before, as ship operators opt instead to sail around the Cape of Good Hope rather than through the Suez Canal, thus adding time to voyages.

People are not fully aware that these factors would drive down the overcapacity being reported on the supply side, Mr Wang said, adding that reports of 10 per cent of the container ship fleet being laid up are wrong.

He maintains that ships taken off the market have not been laid up but are merely idling to be activated.

Mr Wang said a first-hand internal survey conducted at his company earlier this year had found that availability of capital for shipping was down 5 to 10 per cent against the funding available a year ago.

Seaspan said it had successfully negotiated delivery delays on half of its newbuilding portfolio originally slated for delivery this year.

As of December 31, 2008, Vancouver-based Seaspan had remaining instalments totalling US$2.1 billion due on 33 vessels on order. It has long-term credit facilities to fund the newbuildings and does not have any credit facilities maturing until 2015.

Mr Wang added that 70 per cent of his company's time charter portfolio comes from China, meaning that Seaspan was very comfortable with the creditworthiness of its counterparties. No time charter renewals are coming up this year or next, helping the company ride out the current downturn.

Source: Transportweekly